IAC ups tender price for 7% notes; to exchange for Internal Leisure 9½% notes after spinoff

By Susanna Moon

Chicago, July 18 - IAC/InterActiveCorp. said some holders of its 7% senior notes due 2013 will exchange their notes for $300 million of 9½% senior unsecured notes due 2016 to be issued by Interval Leisure Group, Inc.

Investors may exchange their notes after the spin off of Interval, according to a company press release.

IAC said it will also raise its tender price for the 7% notes by cutting the fixed spread over the yield on the reference Treasury security.

The payout for each $1,000 principal amount of notes will now be determined based on the present value on the settlement date of all future cash flow to Jan. 15, 2013, based on the bidside yield on the 3 5/8% Treasury note due Dec. 31, 2012 plus 100 basis points minus accrued interest, down from 215 bps.

The total payment will include a consent fee of $30 per $1,000 principal amount for notes tendered by the consent deadline.

The issue and exchange of the new Interval notes are being made in connection with the spin off of Interval, the company said.

The company said it has received consents from holders of more than 50% of the notes.

"We are able to eliminate uncertainty over the resolution of the 7% notes, provide our tendering bondholders with a more attractive tender price and allow investors to achieve certain benefits in the credit derivative market as a result of the exchange structure, which in turn helped IAC to secure attractive financing for Interval at an otherwise challenging time," chief financial officer Tom McInerney said in the release.

The exchange is intended to create a succession event for the purposes of credit default swaps, with Interval as the sole successor of IAC.

Interval had previously planned to sell $300 million of eight-year notes as a regular new issue of junk bonds. Price talk was set at 10¾%-11% on Tuesday.

In the IAC tender, the consent deadline is 5 p.m. ET on July 23, and the tender offer will expire at midnight ET on Aug. 6. Pricing will be determined at 2 p.m. ET on July 23.

The company is soliciting consents to amend the indenture to eliminate all of the restrictive covenants and some events of default. Holders may not tender their notes without delivering consents or vice versa.

All holders who tender will also receive accrued interest up to but excluding the settlement date.

The proposed amendments require consents from holders of a majority of the notes.

The offer also requires that IAC satisfy or waive all conditions of the proposed spinoffs to its stockholders. The distribution of shares of any company to be spun off must occur before the expiration, and the supplemental indenture implementing the proposed amendments must be executed.

Consummation of the tender offer and consent solicitation is not a condition to any of the proposed spinoffs, the company said.

Morgan Stanley & Co., Inc. (800 624-1808 or collect at 212 761-1941) is the dealer manager. MacKenzie Partners, Inc. (800 322-2885 or collect at 212 929-5500) is the information agent.

IAC is a New York-based operator of diversified businesses in sectors being transformed by the internet.

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